Peter Oppenheimer is on the call

Fueled by iPhone and iPad sales

Talking about mac

4 million sold, 7% growth, compared to IDC of 2% overall growth for PCs. Between 3-4 weeks of channel inventory which is below what we normally wany. We release Mountain Lion preview. Expect in late summer this year.

Revenue from iPhone...

iPad

Pleased with 11.8 million sales, 151% increase. Customers love the retina display. Love the camera. Now in 40 countries. Saw strong growth around the world. Revenue of iPad and accessories was $6.6 billion, increase of 132%.

On the lower iPad price ...

iPad cannibalized Mac?

TIM COOK SPEAKS! Compare to last year is largely affected that we changed portable last year. Last year up 53% y/y so that compare was difficult. Look at sequentially, we had 14 weeks in December quarter.

Yes, some cannibalization. Vast majority is the compare to a year ago.

Can you talk about markets for PC and tablets going forward? Seems to be work on PC platforms to combine PC and tablet like Windows 8.

TIM: Anything can be forced to converge. Trade offs at end of the day don't please anyone. You can converge a toaster and a refrigerator, but won't please anyone.

We've said this was big from day one. Reason is the uses will be so broad. We've seen that. Consumer, education, enterprise. The apps are so easy to make meaningful. As ecosystem gets better and better...

Tim Cook still going ...

In terms of the market, IDC, Gartner, Forrester, they're all seeing the lines cross between tablets and PCs.

That said, still think there's a market for the MacBook Air. Appeals to someone with different requirements. Wouldn't want to compromise. Won't please either users. To make compromises of convergence, we're not going to that party.

COOK: Record revenue at $7.9 billion, up over 3 times. Mind boggling that we could do this well. Part is pent up demand for iPhone 4S. China not able to get in the Q1 period. Strong demand for iPad 2. Have not shipped in mainland China new iPad, but have shipped in Hong Kong. Mac up 60% thanks to halo from both.

iPad is only in 2,500 points of sale. Expanded, expanded a lot, but a lot of headroom.

Question about Wal-Mart moving from 1 store to 25 within? How is it going for Apple?

iPhone supply/demand in Asia Pacific? Is that in balance? Inventory?

COOK: On 2.6 million, our desire to increase channel inventory across the channel. Our target is 4-6. Addition of 2.6 million allowed us to get in that range. Supply and demand balance at the end of the quarter. MOther of all Januarys getting out vast majority of iPHone 4S backlog and getting China off the ground.

As for China ... no supply demand balance for iPhone. For new iPad, worldwide constrained, demand has been robust. Selling as fast as we can.

China has an enormous number of people moving to higher incomes. Creating a demand for goods, not just Apple. I think tremendous oppty for companies that understand China, and I think we understand it.

Changes in Spain from Vodafone, any changes there?

COOK: Spain has been weak for us, and probably most countries. Materially less growth than elsewhere. Not related to carrier. Spain in a terrible economic situation. I look at it as an unusual case.

To be clear abot what was done ... carriers have subsidies for existing customers. Pulled subsidies on new customers. Not a pull of all subsidies. All carriers in the market did not do that. A couple. Wouldn't use as a proxy for the world.

Imply iPhone unit sales to be down 10 million Q/Q? Is that right?

Oppenheimer: Let me go in reverse order. When we give guidance, we give you guidance we can make. We do expect decline iPhone sales decline because of channel inventory build. Entered March Q with sig backlog. Able to fulfill that. Immense confidence.